SUNFLOWER SEED MARKET VALUE CHAIN PROFILE

SUNFLOWER SEED MARKET VALUE CHAIN PROFILE 21-211

1. DESCRIPTION OF THE INDUSTRY Sunflower seed is primarily used for the manufacturing of sunflower oil and oilcake. In South Africa sunflowers are well adapted in both hot and dry climate. The seed can be consumed after the hull has been removed as a snack or used for different oil production. Most of the seed produced is marketed locally to expressers, animal feed and for seed. Sunflower is the third largest grain crop produced in South Africa after maize and wheat. For the period between 2 and 29, an average of about 682 thousand tons sunflower seed were produced per annum while the gross value was approximated at 1. 4 billion rands per annum.. South Africa is not a significant role player in the production and trade of oilseeds in the international market since it contributes only about 3% to the sunflower seed produced in the world. The gross value of sunflower seed produced in South Africa has been relatively volatile for the past ten years. From Figure 1 below there is an indication of cyclical behavior of the gross value of production, which can be associated with the cycle of the producer prices received for sunflower seed. During the year 29, sunflower seed production contributed approximately 1.82% to the gross value of agricultural production; which is the highest over the ten year period under review. Figure 1: Sunflower Seed - Gross Value of Agricultural Production Gross Value (R') 45 4 35 3 25 2 15 1 5 2 21 22 23 24 25 26 27 28 29 Marketing Year Source: Agricultural Statistics 1.1 Production Areas Sunflower seed is produced mostly in the eight provinces out of the nine provinces. Traditionally, the North West and Free State Provinces produced a significant amount of approximately 85% of sunflower seed. Sunflower seed can be planted from the beginning of November to the end of December, which is almost the same time for maize plantings. 24 sunflower MARKET VALUE CHAIN PROFILE 21-211

Table 1: Sunflower seed production by provinces Province Production in 25 (tons) Production in 26 (tons) Production in 27 (tons) Production in 28 (tons) Production in 29 (tons) Western Cape 45 8 3 54 7 Eastern Cape 24 24 18 36 78 Northern Cape 1 1 8 1 32 9 1 Free State 26 24 155 459 363 Limpopo 36 42 8 12 5 77 9 Mpumalanga 45 5 56 23 13 25 5 37 7 Gauteng 13 9 14 85 7 7 8 7 9 82 North West 262 91 2 11 3 298 Source: Agricultural Statistics The general observation from Table 1 is that during the five year period between 25 and 29 production of sunflower seed has experienced a downturn in almost all the major producing provinces. The Free State Province has consistently experienced a downward trend in sunflower seed production during this period except in 29; while another major producer the North West Province has also had a similar experience. The same trend is observed in other provinces such as the Limpopo and Mpumalanga. The actual production of sunflower seed during the 28/9 production season is depicted in Figure 2 and shows that the Free State and North West provinces were the major producers of this crop, followed by Limpopo and Mpumalanga provinces. Very small quantities of sunflower seed were produced in the Western, Eastern and Northern Cape Provinces of South Africa. The Free State and North West provinces are the major traditional producers of sunflower seed since the main grain production areas are situated within these provinces. sunflower MARKET VALUE CHAIN PROFILE 21-211 25

Figure 2: Sunflower seed production by province 28/9 Western Cape % Eastern Cape % Northern Cape % North West 37% Free State 46% Gauteng 1% Mpumalanga 5% Limpopo 11% Western Cape Eastern Cape Northern Cape Free State Limpopo Mpumalanga Gauteng North West Source: Agricultural Statistics 1.2 Production Trends Production of sunflower seed has an inverse relationship with the production and prices of maize as can be seen in Figure 3 below. This can be ascertained by the large production experienced in 21/2 where production of maize was lower due to unfavorable weather conditions during that particular season. The hectares planted for sunflower seed have been volatile for the past ten years, with an average annual growth of only 1.8%. Only in recent seasons hectares planted have stabilized at around 6 hectares per annum with the exception of the 26/7 production season when the total production was around 45 tons. Both area planted and total production of sunflower seed experienced substantial increase during the 27/ 8 season as compared to the past four seasons, followed by a slight decline in 28/9 season. 26 sunflower MARKET VALUE CHAIN PROFILE 21-211

Figure 3: Area Planted & Total Production Area Planted (Ha) 8 7 6 5 4 3 2 1 12 1 8 6 4 2 Total Production (Tons) 1999/' 2/'1 21/'2 22/'3 23/'4 24/'5 25/'6 26/'7 27/'8 28/'9 Production Years Area Planted (ha) Total Production(tons) Source: Agricultural Statistics Information on the number of sunflower producers is not available, but industry sources believe the number of producers is just slightly lower than the number of maize producers. This is due to the fact that farmers plant both crops simultaneously as part of their diversification strategy (FPMC report December 23). 2. MARKET STRUCTURE 2.1 Domestic Market The processing of sunflower seed is highly capital intensive and requires high technology and specialized knowledge. The refining process produces sunflower oil which is used mostly for cooking. Most of the large refineries are situated in Gauteng and Kwazulu Natal. The greatest importance of sunflower production is the extraction of oil from the seed. South Africa has produced about 23 tons of sunflower oil for the past ten years, which represent about 3% of the seed produced. The industry does not import any significant sunflower seed but import sunflower crude oil. For the past ten years the quantity of sunflower crude oil imported has decreased by 17%, which indicate that the processors were able to source their input cheaply in the domestic market than in the international market. Specifically during 22 imports amounted to only 4 tons which was mostly affected by the depreciated exchange rate hence it was expensive to import. sunflower MARKET VALUE CHAIN PROFILE 21-211 27

Figure 4: Sunflwer Seed - Domestic Producer Sales Vs Exports 1 9 8 7 6 Tons 5 4 3 2 1 1999/' 2/'1 21/'2 22/'3 23/'4 24/'5 25/'6 26/'7 27/'8 28/'9 Marketing Year Producer sales (tons) Exports (tons) Source: Agricultural Statistics Figure 4 indicates that South Africa is not a major exporter of sunflower seed. Over the past ten years sales of sunflower seed have been in the domestic market with very little quantities destined for the export market. This can be due to the fact that our processing capacity in the country is big enough to accommodate most of sunflower seed produced locally. In actual fact South Africa remains a net importer of sunflower seed. Sales in the domestic market increased substantially during 27/8 owing to increased production during this period and this was followed by a slight decline during 28/9 season. Figure 4.1: Sunflower seed sold to the processing industry To Expressers (tons) 9 8 7 6 5 4 3 2 1 2 21 22 23 24 25 26 27 28 29 Period (Years) To Expressers (tons) Seed & Feed (tons) Source: Agricultural Statistics Figure 4.1 clearly indicates that the quantity of sunflower seed sold to expressers was much higher than the quantity sold as seed and for animal feed manufacturing during the period under analysis. 28 sunflower MARKET VALUE CHAIN PROFILE 21-211

The figure makes it clear that the sunflower seed in South Africa is more popular for its use as a raw material for cooking oil production than for animal feed. The quantity of sunflower seed sold to expressers was very low during the year 27 mainly as a result of lower levels of local production at the time. Quantities sold to local expressers increased slightly during the years 28 and 29 as the local production increased. 2.2 Producer prices The sunflower seed is one of the commodities traded on SAFEX (South African Futures Exchange). The SAFEX price serve as an indicator for producers to what they can ask for their produce in the market as at the current marketing system they are responsible for marketing their produce. The price of sunflower seed is definitely dependent on local demand and supply factors, and the demand and supply in the international market. The international oil prices act as a guideline for domestic seed and oil prices. In particular, the situation of the Argentinean oil market has a significant impact on the local market since the Argentina oil market has the same marketing period of sunflower seed as South African producers (FPMC report 23). The sunflower seed price is determined at import parity. Figure 5: Sunflower Seed Producer Prices Rands/Ton 45 4 35 3 25 2 15 1 5 1999/' 2/'1 21/'2 22/'3 23/'4 24/'5 25/'6 26/'7 27/'8 28/'9 Years 2.3 Exports Source Agricultural Statistics The prices producers received for sunflower seed produced has been around R1 per ton prior to 2/1 season, then increased just over R1 5 up to 26. This was followed by a general decrease from the year 23 up to 25 which can be attributed to a strengthening rand against the US dollar over the same period. Producer prices increased substantially during the 26/7 season to levels close to R3 /ton, until a peak was reached to levels just below R4 5 per ton during the year 27/8. This was followed by a slight decline in producer prices during the 28/9 season. The major exporters of sunflower seed to South Africa are Russian Federation, Romania, and Argentina. During 29, Russian Federation was responsible for about 71% of South Africa s total sunflower seed imports, followed by Romania and Argentina with 18.7% and 4.5% respectively. sunflower MARKET VALUE CHAIN PROFILE 21-211 29

Figure 6: Value of sunflower seed exports by provinces 5 Export Value (Rand) 4 3 2 1 2 21 22 23 24 25 26 27 28 29 Western Cape 1688847 191656 122375 534835 33133 3757763 1672 17829 37339 29299 Eastern Cape 45 13212 Free State 5 117 177 4 Kw azulu-natal 73414 49936 738923 3735331 2527687 9123582 746237 8715573 59631548 46685514 North West 745397 3887 39136 266626 15689 199 Gauteng 795827 239679 124536 425881 481981 111746 62343 484315 42437352 5931 Mpumalanga 4814298 7399 5863 Period (Years) Source: Quantec Easy Data Sunflower seed exports over the period between 2 and 29 are mainly from the Gauteng Province, and very minimal exports originating from the North West and Kwazulu- Natal provinces of South Africa. The Gauteng province recorded high sunflower seed export values with peak experienced during 28 that correspond with increased production levels and increased areas planted to sunflower seed domestically followed by very low sunflower seed exports levels from the North West Province. Between 21 and 27 exports of sunflower seed through the KwaZulu- Natal Province were greater that from any other province in the republic with greater export values recorded during this period. Exports of sunflower seed from Gauteng were very low during the year 29 while those from KZN were the highest at the time. The trend for sunflower seed exports from Western Cape Province is shown in Figure 3 below. In the Western Cape Province sunflower seed exports occur mostly through the City of Cape Town Metropolitan municipality which recorded a peak during 21 and then declined substantially between the periods 22 and 25. Sunflower seed exports from the Eden district municipality have been constantly low for the period 2 and 24, increasing substantially in 25 but later decreased in 26 until there were no exports from the district between the year 27 and 29. 21 sunflower MARKET VALUE CHAIN PROFILE 21-211

Exports Value (Rand) Figure 7: Value of sunflower seed exports from Western Cape 4 35 3 25 2 15 1 5 City of Cape Town Metropolitan Municipality 2 21 22 23 24 25 26 27 28 29 1688847 191656 122375 5399 3332 3572 92778 17829 37339 29299 Cape Winelands District 11 18542 Eden District 4736 37865 13294 Period (Years) Source: Quantec Easy Data The trends in sunflower seed exports from the City of Cape Town Metropolitan Municipality continued to increase from 26 until 29, showing an upward movement. The location of ports in this province accounts for high export values recorded from the City of Cape Town municipality. It is also important to note that insignificant exports of sunflower seed also occur from the Cape Winelands District Municipality. Exports Value (Rand) Figure 8: Value of sunflower seed exports from North West Province 45 4 35 3 25 2 15 1 5 2 21 22 23 24 25 26 27 28 29 Bojanala District municipality 3477 199 Southern District municipality 397697 3887 39136 266626 15689 Period (Years) Source: Quantec Easy Data Figure 8 indicates that in the North West Province, sunflower seed exports are recorded mainly from Bojanala and Southern Districts, with Bojanala dominating from the year 2 until 22. Sunflower seed exports from the North West province originate mainly from Dr Kenneth Kaunda District (formerly the Southern District) which is a major grain producing region within the province. However, the values of sunflower seed exports from this district diminished during the recent years between 25 and 29. sunflower MARKET VALUE CHAIN PROFILE 21-211 211

Figure 9: Value of Sunflower Seed Exports from Mpumalanga Province 6 Exports Value (Rand) 5 4 3 2 1 2 21 22 23 24 25 26 27 28 29 Gert Sibande District municipality 7399 Nkangala District municipality 4814298 5863 Period (Years) Source: Quantec Easy Data In spite of the fact that the Mpumalanga province is the third largest producer of sunflower seed in the country, its contribution to exports has been very minimal and erratic over the period under analysis. This is mainly due to lack of logistics necessary for succesful exportation of grains in the province and also due to the fact that the major producing districts are situated closer to Gauteng which well equipped with facilities for handling of grains. As a result most of the crop produced in this province is transported to Gauteng for further handling and trading. These exports originate mainly from the Nkangala district and insignificant values were also recorded from Gert Sibande District in 21. Figure 1: Value of Sunflower Seed Exports from KZN Province 7 6 Exports Value (Rands) 5 4 3 2 1 2 21 22 23 24 25 26 27 28 29 UMgungundlovu District 2249 42 Umzinyathi District 68924 49936 738923 3735331 249894 78615 745817 8685914 59631548 46685514 ethekwini Metropolitan Municipality 28783 1317432 29659 Period (Years) Source: Quantec Easy Data The value of sunflower seed exports from the Kwazulu-Natal province were fluctuating between the year 2 and 29 with the lowest levels having occurred between the periods 2 and 21. 212 sunflower MARKET VALUE CHAIN PROFILE 21-211

Sunflower seed exports from the UMzinyathi district started increasing in 22 and then decreased substantially between 23 and 24. Significant increases in the value of sunflower seed exports occurred between 27 and 28, until a peak was attained at levels above R6, during the year 29. These exports that originate mainly from the UMzinyathi district municipality are mainly because some of the availability of the Durban harbor in the province, which gives the Province a comparative advantage when it comes to exportation of many agricultural products. Exports Value (Rand) Figure 11: Value of sunflower seed exports from Gauteng Province 5 4 3 2 1 2 21 22 23 24 25 26 27 28 29 Sedibeng District 218 7158 1848 West Rand District 52278 114213 16727 511429 446363 1119 16475 Ekurhuleni Metropolitan Municipality 3552 347 27517 42374152652377 1192 12197 11168 11342 552294 City of Johannesburg Metropolitan Municipality 95336 197499 44741 13466 244391 46487 94699 19626 4.2E+8 1953 City of Tshwane Metropolitan Municipality 345489 811 1759 Period (Years) Source: Quantec Easy Data In the Gauteng province, as shown in Figure 11 sunflower seed exports arise mainly from the City of Johannesburg Metropolitan Municipality while sunflower seed exports from the other three districts namely, Sedibeng, West Rand and Ekurhuleni have been very irregular over the period between 2 and 29. The value of sunflower seed exports originating from the City of Johannesburg municipality has peaked during the year 28 and then declined substantially in 29 while exports from the other three districts have been considerably lower during the period under review. Gauteng Province, in spite of not being a major producer of sunflower seed is an exporter of sunflower oil because some of larger number of traders who are situated in the province as well as the availability of Randfontein Grain Market in the Province. Figure 12 below indicates that sunflower seed exports to other regions were very low and unreliable over the period under analysis, mainly due to relatively lower levels of local production. Sunflower seed from South Africa is exported mainly to Africa, Americas, Asia and Europe and intermittently to Oceania. The exports to these regions fluctuated considerably over the past ten years with a peak of exports destined to Europe and Asia in the year 28. sunflower MARKET VALUE CHAIN PROFILE 21-211 213

Figure 12: Volume of sunflower seed exports to various regions Export Volume (Tons) 7 6 5 4 3 2 1 2 21 22 23 24 25 26 27 28 29 Africa 252.22 165.7 24.78 1.3 39.355 496.11 333.15 335.62 135.2 1187.2 Americas 358.52 24.842 114.1 113.1 62.72 75.619 4.193 23.768 81.441 21.27 Asia 229.48 58.38 5.419 655.82 246.97 214.46 172.29 146.76 185.34 Europe 66.49 739.24 879.49 13.67 92.9 39.867 2.94 3.145 684.165 Oceania.16 Preiod (Years) Source: Quantec Easy Data Sunflower seed exports to all the main four regions experienced a dramatic decrease between the years 2 and 27 with exports to the African region increasing slightly between 25 and 26. Figure 13: Volume of sunflower seed exports to Africa 1 Export Volume (Ton) 8 6 4 2 2 21 22 23 24 25 26 27 28 29 Eastern Africa Rest 16.182 4.314 19.3 24.796 12.95 176.99 124.95 388.33 99.755 Middle Africa Rest.5.3.96.151.6 Northern Africa 113.5 146.5 64.5.8 215.62 118 2 762.3 849.21 Western Africa 7.5.187 2.63.75.5 4.786 4.342.778 1.246.62 SADC 229.22 51.827 87.758 16.42 14.498 153.8 33.668 9.893 153.59 237.64 Period (Years) Source: Quantec Easy Data On the African continent we export our sunflower seed to Eastern Africa, Northern Africa and SADC with insignificant amounts of exports going to Middle Africa Rest and Western Africa. In the Eastern Africa, we export our maize mainly to Kenya and Uganda while Zimbabwe remains the major importer of sunflower seed originating from South Africa in the SADC region and this can be attributed to the economic crisis that the country is facing. In the year 25, higher amounts of sunflower seed exports from South Africa were destined to Northern Africa, with a peak reached slightly below R5,, followed by exports to SADC and the Eastern Africa Rest. However, 214 sunflower MARKET VALUE CHAIN PROFILE 21-211

from the year 25, several fluctuations occurred with regard to sunflower seed exports to Africa until a peak was attained during the period 29 with more exports being destined to the Northern Africa, followed by exports to Eastern Africa Rest and the SADC region in that order. 2.3.1 Share Analysis Table 2: Contribution of various provinces to the total SA sunflower seed exports (%) Year 2 21 22 23 24 25 26 27 28 29 Province Western Cape 19.3 63.73 11.46 6.7.44 26.84 1.29 1.89.6.62 Eastern Cape. 1.49..15...... Free State.......1.4.. Kwazulu- Natal 8.4 13.63 82.75 42.44 33.57 65.17 91.11 92.88 12.32 98.6 North-West 8.52 12.92 4.38 3.2 2.8...1.. Gauteng 9.9 7.96 1.39 48.29 63.9 7.98 7.57 5.16 87.61 1.24 Limpopo..........72 Mpumalanga 55.3.24........12 Source: Calculated from Quantec easy data Table 2 above confirms the earlier observation that Gauteng, Kwazulu-Natal and Western Cape Provinces are the major exporters of sunflower seed in South Africa. Gauteng Province commanded the greatest share of South Africa s total sunflower seed exports during the years 23, 24 and 28 while KwaZulu-Natal Province became be the largest exporter of sunflower seed in 22 and again between 25 and 29 except in 28. As mentioned earlier, the availability of logistics/ infrastructure and trading agents in Gauteng, KZN and Western Cape provinces give these provinces a competitive edge with regard to exportation of sunflower seed and other grains. Table 3: Contribution of various districts in the Western Cape to the provincial sunflower seed exports (%) Year 2 21 22 23 24 25 26 27 28 29 District City of Cape Town 1 1 1 99.11 99.68.81 87.46 1 1 1 Cape Winelands.....3.49.... Eden....88. 98.69 12.53... Source: Calculated from Quantec easy data Table 3 clearly shows that the City of Cape Town municipality serves as a bypass of sunflower seed exports due to the use of the Cape Town harbor since it commanded the greatest share of sunflower seed exports between the years 2 and 24. During the 25 year the Eden district contributed 99% to the total provincial sunflower seed exports after which the situation returned to the one experienced pre-25. City of Cape Town have recently become a sole exporter of sunflower seed in the province having accounted for 1% of the province s total exports in 28 and 29. sunflower MARKET VALUE CHAIN PROFILE 21-211 215

Table 4: Contribution of various districts in the North West Province to the provincial sunflower seed exports (%) Year 2 21 22 23 24 25 26 27 28 29 District Bojanala Platinum 46.65...... 1.. Dr Kenneth Kaunda 53.35 1 1 1 1..... Source: Calculated from Quantec easy data Sunflower seed exports from the North West Province have been recorded in the Bojanala Platinum and Dr Kenneth Kaunda districts. Table 4 indicates that most sunflower seed exports in the North West Province originated from Dr Kenneth Kaunda district primarily between the years 2 and 24. The Bojanala Platinum district commanded 1% share of sunflower seed exports in 27 after a two absence of exports of this product from this province. However, during the period of 28 to 29, there were no exports of sunflower seed from the province. Table 5: Contribution of various districts in Gauteng Province to the provincial sunflower seed exports (%) Year 2 21 22 23 24 25 26 27 28 29 District Sedibeng.......32 1.47.. West Rand.. 41.97. 2.37 94.92 82.44 92.16. 2.79 Ekurhuleni 44.6 14.21 22.9 99.68 55.13.91 1.96 2.3. 93.6 City of Johannesburg 11.97 82.4 35.92.31 42.49 4.16 15.26 4.5 99.99 3.31 City of Tshwane 43.41 3.38........29 Source: Calculated from Quantec easy data The City of Johannesburg, Ekurhuleni and West Rand districts in the Gauteng province are the main players in the export of sunflower seeds due to the role played by the Randfontein market in the trading of grain. The City of Tshwane Metropolitan District only recorded sunflower seed exports between the years 2 and 21. Grain gets transported by rail from Randfontein to the harbors for export purposes. During the period 28, the City of Johannesburg commanded 99.99 % of Gauteng s total sunflower seed export to sunflower seed exports. Table 6: Contribution of various districts in KwaZulu-Natal Province to the provincial sunflower seed exports (%) Year 2 21 22 23 24 25 26 27 28 29 District UMgungundlovu 3.19......6... UMzinyathi 96.8 1 1 1 98.86 85.56 99.94 99.66. 1 ILembe.......... EThekwini.... 1.13 14.43..34.. Source: Calculated from Quantec easy data 216 sunflower MARKET VALUE CHAIN PROFILE 21-211

2.4 Imports In the Kwazulu-Natal province, the UMzinyathi district commanded the greatest share of sunflower seed exports between the periods 2 and 29 with very fractional exports recorded for the EThekwini district in 24 and 27. During the 27 season the UMzinyathi district accounted for 99.66% of sunflower seed exports from the KwaZulu-Natal, with the remaining.34% coming from EThekwini Metropolitan district. However in 28, there ware no sunflower seed exports from KwaZulu-Natal Province. South Africa imports sunflower seed from the following regions: Europe, Asia, the Americas and Africa, particularly from the SADC region. The European Union is a very small and irregular import market for sunflower seed since very small quantities have been imported from countries in this region between the years 2 and 29. Figure 14: Volume of sunflower seed imports from various regions 1 Imports Volume (Ton) 8 6 4 2 2 21 22 23 24 25 26 27 28 29 Africa 114 418.13 1162 524 418 399.32 559.68 3973.6 68.82 532.5 Americas 398.5 8.833 64.35 132.29.843.589 27.55 235.42 289.96 486.5 Asia 251.35 17 19.42 595.83 415.45 464.1 49.36 686.55 37.15 396.81 Europe.565.743.27.19 1726 1.391 17.52 45.48 52.87 87627 Oceania 16.498 149.69 127.59 15.73 3.272 11.275 13.65 42.11 32.559 176.4 Period (Years) Source: Quantec Easy data Figure 14 indicates that over the past ten years South Africa has been importing sunflower seed consistently from Africa, the Americas, Europe and Oceania with irregular imports coming from Europe. During the period 2, South Africa imported sunflower seed mainly from the Americas, followed by Asia, Africa and Oceania to levels below 1 tons. However, imports from all five regions have been insignificant over the period under review, until imports from Europe peaked in 29. sunflower MARKET VALUE CHAIN PROFILE 21-211 217

Figure 15: Volume of sunflower seed imports from africa Imports Volume (Ton) 45 4 35 3 25 2 15 1 5 2 21 22 23 24 25 26 27 28 29 Eastern Africa Rest.4 1 SADC 114 418.1 1162 524 48 399.3 559.7 3974 68.8 532.5 Period (Years) Source: Quantec Easy data As Figure 15 demonstrates, on the African continent South Africa imports its sunflower seed mainly from SADC region which is because of the SADC Free Trade Agreement which facilitates flow of commodities among SADC countries at no tariff charges. In the SADC region, sunflower seed imports originate mainly from countries such as Malawi, Zimbabwe and Mozambique, with fractional and erratic quantities originating from DRC and Zambia. Imports from these countries were very low in 2 and increased slightly until 22. The highest volumes of imports from SADC were experiences during to year 27 when about 4 tons were imported from the region. Figure 16: Volume of sunflower seed imports from Oceania Imports Volume (Tons) 2 18 16 14 12 1 8 6 4 2 2 21 22 23 24 25 26 27 28 29 Australia 16.498 149.69 127.59 15.73 3.272 11.275 13.65 41.97 32.559 176.4 Polynesia.14 Period (Years) Source: Quantec Easy Data Sunflower seed imports originating from Oceania are mainly from Australia. The period under review opened with very low volumes of imports from Oceania followed by a sharp increase to 218 sunflower MARKET VALUE CHAIN PROFILE 21-211

above 14 tons in 21. However, the volume of sunflower seed imports from this region declined dramatically in 24 primarily due to the fact that greater volumes of sunflower seed were imported from Europe during that year, while on the other hand the local production was also relatively higher. Figure 17: Volume of sunflower seed imports from NAFTA 12 1 Import Volume (ton) 8 6 4 2 2 21 22 23 24 25 26 27 28 29 Canada.1 United States 1.96 4.936 1.977 1.13.3.54.796 1.86 7.814 Period (Years) Source: Quantec Easy Data The principal exporter of sunflower seed to South Africa in the NAFTA is the United States of America, with minimal amounts being exported from Canada. Imports from United States of America were very low at the opening stages of the period under review and this changed when imports from this country reached maximum levels above 1 tons in 23. Figure 17 also indicates that imports from Canada were very low and unreliable over the period under analysis. sunflower MARKET VALUE CHAIN PROFILE 21-211 219

Figure 18: Volume of sunflower seed imports from South America 45 4 Imports Volume (Ton) 35 3 25 2 15 1 5 2 21 22 23 24 25 26 27 28 29 Argentina 3978.5 3.897 62.328 122.16.843.466 27.496 234.62 288.87 478.22 Chile.119.2 Period (Years) Source: Quantec Easy Data Figure 2 makes an indication that in South America we get our sunflower seed imports mainly from Argentina. This is not surprising since Argentina is one of the largest producers of grains in the world. Imports of sunflower seed originating from Argentina have fluctuated tremendously between the years 2 and 29 with greater volumes of imports recorded during the years between 2, 23 and 29. About 4 tons of sunflower seed were imported during the year 2 which is the highest for the period under analysis. 2.5 Processing Sunflower seed provides 4-5% of oil, which is mostly processed to cooking oil. The oil is used on a daily basis in households, restaurants and various food industries. Sunflower is the basic raw material for the preparation of margarine and spreads, used daily by millions of people. Some pet food also contains oilseed raw material. In desperate times sunflower oil can also be converted to diesel for use in diesel engines as bio-fuel. 22 sunflower MARKET VALUE CHAIN PROFILE 21-211

Figure 19: The production of oil Production of Sunflower Seed Press Crude oil Refining Sunflower Oil Hexane Oilcake of Sunflower Source: Grain SA During pressing there are two different methods of extracting oil from the oilseeds i.e. production of crude oil and production of oil cakes from hexane. Sunflower seed provides 4 5% of oil and about 4% of oilcake, which is processed to cooking oil and for animal feed respectively, see the (Figure 19) above. Other oil products include margarine, fuel in diesel engines and other foods. The sunflower seed also produces oil cake, which is widely used for animal feeds (as sunflower oilcake meal) because of its high protein content. Sunflower oil is marketed in the form of refined oil for domestic and industrial cooking as well as baking processes. In South Africa, the main crushers of sunflower seed are Nola Industries, Epic and Epko. Pressing plants with relatively smaller crushing capacity in the country are Sealake Industries, Elangeni Oil & cake Mills and Capital Oil Mills. According to the South African Oil Processors Association there are thirteen oil refineries in South Africa, namely Capital Oil Mills, Continental Oil Mills, Elangeni Oil & Cake Mills, Epic Foods, Epko Oil Seed Crushing, Hentiq 132, Nedan Oil Mills, Nola Industries, Sealake Industries, Sun Oil Refineries, Sunola Oil Mills, UBR and Willowton Oil Mills. Figure 2 below indicates that when sunflower seed is crushed the oil is extracted from the seed and the oilcake that remains is then used to manufacture animal feeds in the form of sunflower oilcake meal. The oil can be used as cooking oil or if hydrogenated it becomes margarine that is used by households. The oil can also find its usage in the biofuel industry to manufacture biodiesel that is used in automotive engines or it can be blended with other vegetable oils to manufacture other foods. sunflower MARKET VALUE CHAIN PROFILE 21-211 221

Figure 2: The uses of sunflower seed. FUEL IN DIESEL ENGINES COOKING OIL OIL MARGARINE Sunflower Seed OTHER FOODS: Massage blends with Vegetable oils OILCAKE ANIMAL FEEDS Source: Adapted from Grain SA 3. MARKET VALUE CHAIN There are five main levels that can be identified in the sunflower seed-to-sunflower oil value chain: sunflower seed producers, crushers of seed, refineries of crude oil, the wholesalers and retailers, and finally the consumers as shown in Figure 22 below: 222 sunflower MARKET VALUE CHAIN PROFILE 21-211

Figure 21: Sunflower Seed market value chain. Sunflower seed Producers Imports of Crude Oil Crushers/Expressers of Seed Refineries of Crude Oil Animal feed Manufacturers Wholesalers & Retailers Consumers Producers of sunflower seed usually deliver their produce to seed expressers who crush the seed to produce crude oil and oilcake. The crude oil can then be used by refineries to produce various products as explained in Figure 22 while the oilcake is used by animal feed manufacturers to manufacture a concentrate in the form of sunflower oilcake meal. Refineries may also import crude oil from the international market and, their products and those of the animal feed manufacturers are packaged, labeled and sent to wholesalers and retails who in turn will sell to consumers. 4. MARKET INTELLIGENCE 4.1 Tariffs South Africa applies the following tariffs to the imports of sunflower seed arising from the following trading partners: sunflower MARKET VALUE CHAIN PROFILE 21-211 223

Table 7 EXPORTING COUNTRY TRADE REGIME DESCRIPTION APPLIED TARIFF 21 ESTIMATED TOTAL AD VALOREM EQUIVALENT TARIFF 21 Argentina MFN duties (Applied) 9.4% 9.4% China MFN duties (Applied) 9.4% 9.4% France Preferential tariff for European Union.%.% Countries Malawi Preferential tariff for SADC countries.%.% Romania MFN duties (Applied) 9.4% 9.4% Russian Federation MFN duties (Applied) 9.4% 9.4% Turkey MFN duties (Applied) 9.4% 9.4% United Kingdom Preferential tariff for European Union.%.% Countries United States of America MFN duties (Applied) 9.4% 9.4% Source: ITC Market Access Map Table 8 indicates that South Africa charges 9.4% tariff on imports of sunflower seed from other countries, but all the European Union Countries (such as France and United Kingdom) and SADC countries receive preferential treatment of not having to pay any tariff when they export sunflower seed to South Africa. This is because of SADC Free Trade Agreement and the EU-SA Trade, Development and Cooperation Agreement that exist between South Africa and EU. The following countries apply the following tariffs to the exports of sunflower seed originating from South Africa: 224 sunflower MARKET VALUE CHAIN PROFILE 21-211

Table 8 IMPORTING COUNTRY Argentina Kenya Mauritius Mozambique Tanzania Sudan Uganda Zambia USA Zimbabwe PRODUCT DESCRIPTION Sunflower seeds for Sowing Sunflower seeds, whether or not broken Sunflower seeds, whether or not broken Sunflower seeds, whether or not broken Sunflower seeds, whether or not broken Sunflower seeds, whether or not broken Sunflower seed, whether or not broken Sunflower seed, whether or not broken Sunflower seed, whether or not broken Sunflower seed, whether or not broken Sunflower seed, whether or not broken TRADE REGIME DESCRIPTION MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) Preferencial tariff for South Africa MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) Preferential tariff for South Africa MFN duties (Applied) MFN duties (Applied) APPLIED TARIFFS 21 TOTAL AD VALOREM ESTIMATED TARIFF 21.%.% 8.% 8.% 1.% 1.%.%.%.%.% 1.% 1.% 3.% 3.% 1.% 1.%.%.%.%.% 5.% 5.% Source: ITC Market Access Map Table 8 indicates that South Africa can enjoy exporting sunflower seed to Mauritius, Mozambique, Zambia and USA at no tariff charges and this is due to healthy trade conditions that exist within SADC and between South Africa and European Union Countries. Sudan and Tanzania generally charges higher tariffs at the levels of 3% and 1.% respectively to their imports of sunflower seed. sunflower MARKET VALUE CHAIN PROFILE 21-211 225

4.2 Performance of the South African sunflower seed industry Source: ITC Trade Map 226 sunflower seed MARKET VALUE CHAIN PROFILE 21-211

Between the periods 25 and 29 sunflower seed imports from the Argentina into SA grew by more than 1% while those from Australia and India grew by 6% and 46% respectively over the same period. During the same period, South Africa s imports from countries such as China, Belgium and Malawi have increased slower than these countries growth in exports of sunflower seed to the rest of the world. Table 9 below shows the major export destinations of sunflower seed produced in South Africa. On average South Africa s sunflower seed exports to the world have increased by 79% in value terms and 8% in volume terms between 25 and 29. The value of sunflower seed exports to the world increased significantly between 28 and 29. During 29 South Africa exported sunflower seed mainly to Sudan, Uganda, Zimbabwe and Tanzania in that order. A total of 1 29 tons of sunflower seed originating from South Africa was exported to the world during 29. Table 9: Importing markets for sunflower seed (126) exported by SA in 29 Importers Exported value in 29 (thousand US$) Share in SA s exports (%) Exported quantity in 29 (tons) Unit value (US$/unit Exported growth in value between 25 and 29 (% p.a.) Exported growth in quantity between 25 and 29 (% p.a.) Exported growth in value between 28 and 29 (% p.a.) World 5 672 1 1 29 4 691 79 8-91 Sudan 4 51 79.4 849 5 32 93 64-4 Uganda 38 6.7 9 4 222 31 24-68 Zimbabwe 37 5.4 98 3 133 16 14 187 Tanzania 263 4.6 9 2 922 81 83 158 USA 99 1.7 15 6 6-128 -71 Argentina 45.8 6 7 5 2 21-56 Kenya 29.5 1 2 9-27 -3-9 Mozambique 16.3 6 2 667 11 1-95 Mauritius 13.2 13 1 67 - - DRC 4.1 29 138 32 132 - Source: ITC Trade Map During 29 Sudan and Uganda commanded the greatest share of sunflower seed exports originating from South Africa. During the same year, Sudan alone absorbed 79.4% of South Africa s total sunflower seed exports followed by Uganda with 6.7%. sunflower MARKET VALUE CHAIN PROFILE 21-211 227

Source: ITC Trade Map 228 sunflower seed MARKET VALUE CHAIN PROFILE 21-211

If South Africa is to diversify its export markets of sunflower seed the biggest markets, which we are currently not utilizing, exist in Netherlands, Spain, Germany and Pakistan. The smaller markets exist in Malawi, Spain, Angola and Ghana. Table 1: Supplying markets for sunflower seed (126) imported by SA in 28 Exporters Imported value in 29 (thousand US$) Share in SA s imports (%) Imported quantity in 29 (tons) Unit value (US$/ unit Imported growth in value between 25 and 29 (% p.a.) Imported growth in quantity between 25 and 29 (% p.a.) Imported growth in value between 28 and 29 (% p.a.) World 32 392 1 89 237 363 134 159 1 868 Russian Federation 23 28 71.6 64 999 357 - - - Romania 6 64 18.7 22 66 268 - - - Argentina 1 447 4.5 478 3 27 378 142 123 Australia 664 2 176 3 773 6 89 419 China 523 1.6 393 1 331 2-8 71 Malawi 111.3 51 218 5 5-55 Turkey 14.3 18 5 778 - - 42 USA 89.3 8 11 125 - - 117 Source: ITC Trade Map During 29 South Africa imported a total of 89 237 tons of sunflower seed from the world. These imports originated mainly from Russian Federation, Romania, Argentina and Australia. Russian Federation commanded the greatest share in South Africa s sunflower seed imports followed by Romania and Argentina. Imports of sunflower seed from Argentina grew by 142% in volume and 378% value between the years 25 and 29. Sunflower seed imports originating from China into South Africa increased by 2% in value and declined by 8% volume between 25 and 29. sunflower MARKET VALUE CHAIN PROFILE 21-211 229

Source: ITC Trade Map 23 sunflower seed MARKET VALUE CHAIN PROFILE 21-211

If South Africa is to diversify its sunflower seed imports, the biggest markets exist in USA, Romania, France and China. Other markets exist in countries such as Netherlands, United Kingdom, Ukraine and Malawi since these countries recorded a positive growth in exports to the rest of the world between 25 and 25. 5. STRATEGIC CHALLENGES AND OPPORTUNITIES As mentioned in the description sunflower seed production is very suitable for South African climatic conditions and is performing well for income generation to the rest of the agricultural sector. According to the FPMC report in 23 the crushing capacity is not fully utilized by the companies therefore, there is an opportunity for any role player in the industry to crush seed, sell the crude oil at a lower price than the import parity price and still manage to realize profit. The challenge is how to get new role players in the industry as it is highly capitalized and requires sophisticated technology. There is a lack of black economic empowerment in this industry and also in the seed trade industry in general. Lack of funding to purchase equipment to get projects off the ground is often cited as one of the major obstacles to transformation. The fact that the growth season of sunflower is short, added to its drought tolerance; it can serve as an ideal alternative crop on low-potential soils when it is late to plant maize. 6. OTHER INFORMATION In the agricultural sector, food safety is very important. As result the oilseed industry is also expected to adhere to o several regulations in this regard. The regulations include: Foodstuffs, Cosmetics and Disinfectants Act of 1972 (Act 54 of 1972) Health Act of 1977 (Act 63 of 1977) Fertilizers, Farm Feeds Agricultural Remedies A of 1947 ( Act 31 of 1947) Agricultural Products Standards Act of 199 (Act 119 of 199) sunflower MARKET VALUE CHAIN PROFILE 21-211 231

7. ACKNOWLEDGEMENTS The following organizations and references are acknowledged: Animal Feed Manufacturers Association Tel: (12) 663 997 www.afma.co.za Grains South Africa Tel: (56) 515 918 Fax: (56) 515 1517 www.grainsa.co.za Food Pricing Monitoring Committee Report 23 Directorate Agricultural Statistics, Department of Agriculture, Forestry and Fisheries Tel: (12) 319 8453 Fax: (12) 319 831 www.nda.agric.za Quantec Easydata www.quantec.co.za ITC Market Access Map http://www.macmap.org/southafrica ITC Trade Map http://www.trademap.org. Disclaimer: This document and its contents have been compiled by the Department of Agriculture for the purpose of detailing the sunflower seed industry. Anyone who uses the information as contained in this document does so at his/her own risk. The views expressed in this document are those of the Department of Agriculture with regard to the industry, unless otherwise stated. The Department of Agriculture therefore accepts no liability that can be incurred resulting from the use of this information. 232 sunflower MARKET VALUE CHAIN PROFILE 21-211